Cargills March net up; survives lackluster economy

Cargills (Ceylon) PLC survived a lackluster quarter ended March 31, 2019 (47Q19), as the supermarket giant reported higher earnings and revenue defying downside risks that came from a poor economy, the interim financial accounts released to the Colombo bourse showed.  

The retailer, which operates the country’s largest supermarket chain under the brand name Cargills Food City, reported revenues of Rs.23.5 billion for the quarter under review compared to Rs.22.6 billion reported for the same period last year—an increase of 4 percent year-on-year (YoY).

However, the revenue was unchanged from the previous quarter ended December 31, 2018. 

The gross profit during the quarter under review was Rs.2.8 billion, up 18 percent YoY as the group was able to contain direct costs.

Cargills, the manufacturers of Kotmale branded dairy and many other fast moving consumer good (FMCG) products under its close to two dozen subsidiaries, saw its operating profits improving by 32 percent YoY to Rs.1 billion. 

While segmental data was not available for each business vertical for the three months under review, it appeared that the group had squeezed the costs through its supply chains to contain the overall cost base as the revenues languished, albeit registering a slight growth during the quarter. 

Cargills, which also carries the master franchise rights for KFC and TGI Fridays, reported earnings of Rs.1.71 a share or Rs.436.9 million for the quarter under review compared to 34 cents a share or Rs.87.3 million reported for the same period last year.

The earnings were achieved despite an increase of Rs.100 million in the net finance cost of Rs.387.1 million. 

Cargills group also has its licensed commercial bank, Cargills Bank Limited under its umbrella as an associate company. 

For the year ended March 31, 2019 (FY19), Cargills group reported earnings of Rs.7.74 a share or Rs.1.98 billion compared to earnings of Rs.12.50 a share or Rs.3.2 billion in the previous year. 

This was on revenue of Rs.94.7 billion compared to Rs.91.3 billion reported a year ago.

Cargills retail business which has little under 400 outlets accounted for Rs.74.4 billion of the total revenue. But the operating profit of the business segment fell to Rs.1.5 billion from Rs.2.5 billion in the previous year. 

The FMCG business of the group, which has been fast adding a number of products into its existing range, made Rs.23.8 billion in revenue and Rs.2.6 billion in operating profits, up from Rs.22.1 billion and Rs.2.2 billion respectively.

 
The restaurants business generated revenues of Rs.3.9 billion compared to Rs.3.6 billion a year ago. The operating profit of the segment declined to Rs. 318.6 million from Rs.382.3 million a year ago. 

As at March 31, 2019, CT Holdings PLC held 70.2 percent stake in Cargills while the Page family separately held approximately another 10 percent in the company. 
The Employees’ Provident Fund held 3.28 percent stake being its second largest shareholder after the promoters. 

Meanwhile, Norway’s central bank, Norges Bank, increased its stake in Cargills to 1.82 percent from 1.62 percent during the three months to March 31, 2019.